David Burt, the Premier of Bermuda recently sat down for an interview for “Balancing the Ledger” where he spoke in lengths about Bermuda’s existing crypto regulations. The current government of Bermuda was elected in 2017 and had taken up the task to identify new opportunities for economic diversification and seek local and overseas investment.
The government is in the process of implementing a comprehensive regulatory regime aimed at providing legal certainty to industry participants and ensuring that business in the sector conducted in or from Bermuda is done in a properly regulated manner.
Burt went on to talk about the sudden death of Gerald Cotten’s sudden death that led to the keys being lost as he was solely responsible for wallets and corresponding keys. Burt said:
“If Quadriga was licensed under the Bermuda Monetary Authority, what has happened would not have been able to happen, because we have rules regarding the custody of master keys and making sure they’re not held by a particular individual.”
Notably, in 2018, the BermudaMonetary Authority (BMA) published a consultation paper on the regulation of digital asset business. This resulted in the creation of a new Digital Asset Business Act or DABA. DABA specifies the the digital asset-related activities to which it applies, impose a licensing requirement on any person carrying on any of those activities, lay out the criteria a person must meet before it can obtain a license, impose certain continuing obligations on any holder of a license, and grant BMA supervisory and enforcement powers over regulated digital asset businesses.
The new legislation sets out standards of disclosure for ICOs, a dual licensing system for anyone who wants to provide digital asset business services to the sector and both a ‘sandbox' regime and an ‘innovation hub' for those in insuretech.
As Burt puts it:
“It basically states what you have to do with the master keys, how those things have to be handled and making sure that they cannot be lost, or if they are lost, there’s a way for that recovery to happen.”
Through the introduction of one of the first legal and regulatory regimes in the world that was tailored specifically for the digital asset and crypto-currency sectors, Bermuda has made a bold statement about its commitment to creating a business environment that balances the interests of both entrepreneurs and consumers, through a legal and regulatory framework that offers certainty and security to both sides.